5 Ways to Make a Profit From a Cattle Ranch

Working ranches for sale

With the economy and populations growing across the country, there is no better time than now to take advantage of ranch properties for sale. Montana, for example, is expected to increase its population by 14% by 2043. For those in the market for ranch properties for sale, here are some things to consider if you are trying to make a profit from your property.

The size of the ranch.
Ranch properties for sale come in a wide variety of sizes. For example, Ted Turner purchased the more than 100-acre Flying D Ranch in 1988. These large plots of land offer more opportunity to make profits because of the abundant amount of space. Smaller ranches have a disadvantage if there cattle is the only source of income. On the contrary, they can be very profitable if the owner knows how to keep it simple and keep overhead costs low.

The number of cows per worker.
A common struggle many ranch owners face is the costs that are associated with both employees and cows. Many ranches run 800-1,200 cows and make sure their cow and yearling are equivalent to that. This maintains labor, housing, equipment and horse costs as low as possible.

The number of acres per cow.
As an alternative to purchasing more cattle land for sale, many ranchers simply develop their own stock water, add fences, and manage grazing. Studies show that light to moderate cattle grazing tends to encourage forb production which benefits wildlife populations on the property. As more cows are added, it won’t be necessary to hire more workers.

Keep debt-to-equity ratio as low as possible.
Many ranchers seek to develop their own water and buy fencing to graze better but have a debt-to-equity ratio that is too high for banks to work with and lend money to. It is important to have keep this debt as low as possible to allow flexibility when changes occur and to adapt and use new ideas. Too much debt could lead to the failure of a business.

Improve gross margin.
Gross margin is determined by the total dollar amount returns subtracted by the direct costs of the business. Total returns come from how many units your business is able to sell and how well you sell them. Make sure not to use inputs you are not confident will make a profit. This includes things like feeds, supplements and healthcare products.

Now that you are aware of how to make the most of ranch properties for sale, you are in a better position than when you started to make the right choice for your needs. Keep in mind the size of the ranch, the number of cows per worker, the number of acres per cow, and try to keep your debt to a minimum. Doing all of the above will ensure you have a ranch that is both profitable and fulfilling.

Leave a reply